CBDT clears the air on tax collection at source

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The Central Board of Direct Taxes (CBDT) has made it clear that the 1 per cent tax collection at source (TCS) — introduced in this year’s Budget — will apply only to the cash component and not the entire sale consideration. This has been conveyed in a clarificatory circular issued by the CBDT on Friday.

To curb the cash economy, Budget 2016 had introduced a provision in income tax law requiring the seller to collect 1 per cent tax at source from the purchaser on the sale in cash of certain goods or provision of services in excess of ₹2 lakh.

Q&A format

The circular — in the form of question and answer — has been issued to clarify the applicability of the provision where the sale consideration received is partly in cash and partly in cheque

TCS will be applicable only on the cash component of the sales amount, and not on the whole of sales consideration, the CBDT circular said.

For instance, if goods worth ₹5 lakh are purchased for ₹2 lakh in cheque and ₹3 lakh in cash, 1 per cent tax will be levied only on ₹3 lakh.

Also, in cash-and-cheque transactions where the cash component is less than ₹2 lakh, there won’t be any TCS, the CBDT clarified. Further, TCS will not be levied if the cash receipt does not exceed ₹2 lakh, even if the sale consideration exceeds ₹2 lakh, said the circular.

Amit Maheshwari, Partner at CA firm Ashok Maheshwary & Associates, said the CBDT has rightly restricted the 1 per cent TCS to the cash component. This is in line with the Centre’s objective to curb the cash economy and target the expenditure side of black money, he noted.

Rahul Jain, Partner, Nangia & Co, said the Centre’s constant efforts to clarify the law and avoid possible disputes are heartening. In the absence of clarification, various local trade associations, head offices of stores selling high value items, etc had taken a conservative position.

“While it is excellent to see the Centre pulling all stops to nip disputes in the bud, one wishes the law was drafted better to avoid confusion in the first place,” he added.

Source: http://www.thehindubusinessline.com/economy/policy/cbdt-clears-the-air-on-tax-collection-at-source/article8775966.ece

Taxmen told to step up efforts for black money window success

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Income Tax Department has asked its officers to make “all out efforts” to attract potential declarants under the domestic black money window by assuring them of confidential and hassle-free disclosures.

In order to give wide publicity, the CBDT has also suggested putting up posters about the Income Declaration Scheme-2016, at places frequented by potential declarants, like club houses, posh markets, showrooms of high end products.

The four-pronged strategy prepared by the CBDT for the success of the scheme, includes single point contact to ensure confidentiality, setting up of facilitation centres across the country, giving wide publicity and monitoring at the highest level.

Finance Minister Arun Jaitley in Budget had announced a four-month window under the Income Declaration Scheme 2016. The scheme, which opened on June 1, allows domestic black money holders to declare ill-gotten wealth and come clean by paying a tax and penalty totalling 45 per cent.

“All out efforts are to be made to ensure the targeted taxpayers are well informed about the scheme and are adequately guided and facilitated for filing declarations so that they can avail maximum benefits under the scheme, which is under highest consideration of the government during the coming months,” the CBDT said in an office memorandum.

In order to ensure confidentiality of the declarants, the Central Board of Direct Taxes (CBDT) has said only Principal Commissioner or Commissioner Income Tax should act as a “single point of contact” for interacting with the declarants.

“Such Pr CIIT/CIT should be the one and only point of contact with the respective declarant. The idea is to ensure the declarant is not exposed to multiple persons in the office so that his confidentiality is not compromised and he is able to file the declaration in a hassle free manner,” it added.

The detailed action plan for the success of black money disclosure scheme was discussed at the annual conference of tax administrators last week.

In its strategy, CBDT has asked Principal Commissioners and Commissioners to provide all “procedural facilities” at the time of disclosure so as to avoid additional interaction with anyone else in the office.

“All records related to IDS-2016 must be kept in the personal custody of the respective Principal CIT /CIT officer in a safe and secure manner,” it said, adding officer with “good inter-personal skills” be deputed as ‘Facilitation Officer’ to answer queries related to the scheme.

In every city where Principal Commissioner is stationed, a “facilitation centre” in the nature of help desk may be opened for disseminating information about the scheme.

The CBDT has also asked its senior officers to hold “frequent meetings” with trade and industry bodies and professional associations, besides organising town halls and seminars.

In order to step up publicity for the scheme at local level, tax officers should disseminate information through posters in regional languages, stalls at local fairs.

In order to ensure monitoring at the highest level, CBDT said ‘IDS Banner’ will become functional next week on its website where the officers would upload their meeting details.

This will help compare the progress made in organising the campaign.

Last year the government came up with a similar scheme for persons having unaccounted black money abroad. Disclosures during that window were charged with a total tax and penalty of 60 per cent.

A total of Rs 4,147 crore of undisclosed wealth was declared during the 90-day foreign black money compliance window that ended September 30. At 60 per cent (30 per cent tax and 30 per cent penalty), the government got a net tax of Rs 2,500 crore from the declarations.

Source: http://www.financialexpress.com/article/economy/taxmen-told-to-step-up-efforts-for-black-money-window-success/294763/

Modi impact! Switzerland to ease tax info exchange norms on stolen data

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Switzerland today said it will relax norms for providing information to foreign nations seeking banking details about their citizens on the basis of ‘stolen data’, a move that would benefit India in its fight against the black money menace.

 

In the case of stolen data, Swiss authorities would extend assistance on tax matters to other countries provided such information was procured through normal administrative assistance channels or from public sources.

 

The proposal, which has been adopted by the Swiss Federal Council, also comes at a time when India is making efforts to bring back unaccounted money stashed by its citizens overseas. The issue of black money also figured during the discussions between Prime Minister Narendra Modi and Swiss President Johann Schneider-Amman earlier this week.

 

The Swiss government today said the practices with regard to “stolen data are to be eased”.

 

“It should become possible to respond to requests if a foreign country obtained the stolen data via normal administrative assistance channels or from public sources,” it said in a release.

 

However, administrative assistance is still not possible if a country actively acquired the stolen data outside of administrative assistance proceedings.

 

In this regard, the Federal Council today adopted the dispatch on amending Tax Administrative Assistance Act.

The Bill is expected to be discussed by the Swiss Parliament this year.

 

Known for its banking secrecy practices, Switzerland has been facing international pressure as countries step up efforts to curb illicit fund flows.

 

In 2013, the Federal Council had suggested easing administrative assistance practices in the case of stolen data but at that time, the proposal was rejected by majority of the cantons, parties and business associations.

 

Since then, international practice has established that exceptions to the exchange of information would be tolerated only on a very restricted basis, the release said.

 

“For instance, the exchange of information could be refused if it is incompatible with public policy, such as in the case of requests motivated by racist, political or religious persecution,” it added.

 

The Swiss government emphasized it intends to respond to future requests that are based on data obtained by the requesting state from another state through normal administrative assistance channels or from public sources.

 

“The consultation revealed that the cantons are virtually all rallying behind the proposal, while the numbers of advocates and opponents in the political parties and organisations appear broadly balanced.

 

“The Federal Council is adhering to the proposal in view of this outcome, as it believes that the proposal is necessary to safeguard Switzerland’s interests,” it noted.

 

Last month, Switzerland started the process for an ordinance to put in place a mechanism for automatic exchange of tax information.

 

During Modi’s visit to Switzerland earlier this week, Swiss government assured India of stepped up cooperation with regard to black money issue.

 

“Combating the menace of black money and tax evasion is also our shared priority. We discussed the need for an early and expeditious exchange of information to bring to justice the tax offenders.

 

“An early start to negotiations on the Agreement on Automatic Exchange of Information would be important in this respect,” Modi had said at a joint media interaction with Schneider-Amman.

 

Under the bilateral treaty for administrative assistance and exchange of information with Switzerland, India has sought details about numerous individuals and companies from the Alpine nation as part of its crackdown against those stashing illicit funds there.

 

Source :http://economictimes.indiatimes.com/articleshow/52691230.cms